Market Watch, Stock News

26 July, 2009 Commentary: NESPE below 29.73 (-4.03%)

Published by Octron on July 26, 2009

Market Closed (3:00 PM): Finally, the market revived a bit after the halt. The NEPSE was able to touch 708.11 (-29.73, -4.03 %) from (-40, -4.7%) at one time during the trading hours. Analyst claim the big players were today, able to fish in the muddy water, buying shares of SCB, NABIL, NIB, BOK and lot of new banks at pretty good price from the panic attacked impatient sellers. The ambiguous language of monetary policy has clearly divided investors into two sides. We are just quoting which each of the group are saying:

Group One:

The Minimum Paid Up Capital of 2 Billion Rupees is still intact, only for the additional capital banks are allowed to use their reserve, deposits or any other capital. So, the new banks will definitely give Right or Bonus shares in order to meet the capital threshold. Only the well established banks might not give any more right shares, as most of them have already met the criteria of Agenda 2010. Still these banks are allowed to give away bonus shares or dividends.

Group Two:

The 2 Billion Rupees capital is not mandatory anymore, even for new banks. So, why would those banks give Right shares?
When, they can just give away 10-15% dividend, why care to give right shares ?

The market will remain divided, unless and until NRB clears the air regarding the amendment of the monetary policy officially. That too, very soon. Otherwise there is chance of market coming to deadlock with seller not wanting to sell shares (due to low price), Buyers not want to buy due to uncertainty of policy.

NSEPSE slips to -4.64% (-34.27 points) 2:20 PM : The red zone just increases with NBB (-6.94%), BOK (-8%), CZBIL(-5.45%), etc going further down. Even non-bank shares like NTC (-3.76%) is moving down. The banking index has hit HALF CENTURY (-49.37%).

TRADING RESUMED (2:00 PM): The dip is now The banking index is already down by 46.24 point (i.e. 5.91%), while sensitive index covering major scrip’s is already down by 4.93%. The market has just re-started trading, its just dipping. The current index is at 703.57 (2:08 PM). Big banks NABIL, SCB, NIB has already hit rock bottom for the trading session, all (-10%), while new bank share prices are rapidly declining (currently ~ -4% to -6%).

BREAKING (July 26, 2009: 1:30 PM NST): The domino affect of Monetary policy amendment started as soon as the trading began today and the market just HALTED for 30 mins as the NEPSE dipped below 4%. The market will resume after 2:00 PM.

The market is dreadful today, as we speak of, the investors have already started showing the panic attack. People are literally tearing off their hairs are banging on the benches. ALL BANKS, from NBB to SCB are in RED ZONE. There is huge debate going on regarding the recent amendment policy. Different people have different interpretation of the policy. The recent article of Kantipur regarding the change of policy seems to have made huge impact. People are fearing NONE OF THE BANKS will give any BONUS or RIGHT SHARES anymore.

All investors are requesting NRB to clarify the recent amendment clauses, if not roll back as soon as possible. Innocent and small investors are losing their nerve and selling off for whatever value they are getting. The flood of sellers was just enough to bring down the NEPSE. People fear, the trend will just dip down after this short break!

Note: All the updates & information is being provided by our friend cum reporter at Broker No. 22 (Siprabi).

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